bbw20201026_8k.htm
false 0001113809 0001113809 2020-10-27 2020-10-27
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 27, 2020
 
Build-A-Bear Workshop, Inc.
-------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
---------------------------
(State or Other Jurisdiction
of Incorporation)
001-32320
-------------------
(Commission
File Number)
43-1883836
---------------------------
(IRS Employer
Identification No.)
 
 
415 South 18th St.
St. Louis, Missouri
----------------------------------------------------
(Address of Principal Executive Offices)
 
63103
------------------
(Zip Code)
 
(314) 423-8000
------------------------------------------
(Registrant’s Telephone Number, Including Area Code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
BBW
New York Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company    
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
 
 

 
Item 2.02.
Results of Operations and Financial Condition.
 
On October 27, 2020, Build-A-Bear Workshop, Inc. (the “Company”) issued a press release setting forth the Company’s preliminary expectations regarding certain financial results for the third fiscal quarter (13 weeks ending October 31, 2020). A copy of the Company’s press release is being furnished as Exhibit 99.1 and hereby incorporated by reference.
 
Item 7.01.
Regulation FD Disclosure.
 
 
On October 27, 2020, Build-A-Bear Workshop, Inc. (the “Company”) expects to participate in investor meetings. The investor presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the investor presentation is also available on the Investor Relations section of the Company’s web site at http://IR.buildabear.com.
 
To supplement its financial statements presented in accordance with GAAP, the Company used, in its investor presentation, certain non-GAAP measures of financial performance. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of the Company’s results in the current period to those in prior periods and future periods. Reference to these non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s financial performance.
 
* * * * *
The information furnished in, contained, or incorporated by reference into Item 2.02 and Item 7.01 above, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”), as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, this report (including Exhibits 99.1 and 99.2) shall not be deemed an admission as to the materiality of any information contained herein that is required to be disclosed solely as a requirement of Items 2.02 and 7.01.
 
This Current Report on Form 8-K and the press released and investor presentation attached hereto as Exhibits 99.1 and 99.2, respectively, contain certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements in this report and in such exhibits not dealing with historical results are forward-looking and are based on various assumptions. The forward-looking statements in this report and in such exhibits are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among other things: statements regarding the Company’s goals, intentions, and expectations; business plans and growth strategies; estimates of the Company’s risks and future costs and benefits; forecasted demographic and economic trends relating to the Company’s industry; and other risk factors referred to from time to time in filings made by the Company with the Securities and Exchange Commission. Forward-looking statements speak only as to the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. The Company disclaims any intent or obligation to update these forward-looking statements.
 
 

 
Item 9.01
Financial Statements and Exhibits.
 
 
(d)
Exhibits
 
Exhibit Number  Description of Exhibit
   
99.1
99.2
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  BUILD-A-BEAR WORKSHOP, INC.
     
     
     
Date: October 27, 2020 By: /s/ Voin Todorovic
  Name: Voin Todorovic
  Title: Chief Financial Officer
 
 
 
ex_209005.htm

Exhibit 99.1

 

image01.jpg 

 

BUILD-A-BEAR WORKSHOP, INC. PROVIDES THIRD QUARTER FISCAL 2020 BUSINESS UPDATE REFLECTING RECENT POSITIVE TRENDS

●  Expects Growth in Total Revenue and Expansion in Gross Profit Margin in Fiscal 2020 Third Quarter Compared to the Fiscal 2019 Third Quarter Despite Ongoing COVID-19 Impact

 

ST. LOUIS – October 27, 2020 – Build-A-Bear Workshop, Inc. (NYSE: BBW) today issued an update to its business expectations for its fiscal 2020 third quarter, the 13-weeks ending October 31, 2020, in conjunction with anticipated investor meetings. The Company noted that while the COVID-19 pandemic continues to impact its operations inclusive of select temporary store closures and reduced operating hours, it currently expects to achieve total revenue growth and expand its gross profit margin as compared to the fiscal 2019 third quarter. The Company attributes this improvement to actions taken to accelerate its digital transformation strategic initiative including enhancing omnichannel capabilities, improving fulfillment efficiencies and adding innovative product offerings while evolving its consumer communications programs. In addition, the Company has reimagined its store experience in ways that comply with recommended safety protocols and has recently executed sweeping favorable rent renegotiations enabled by the high level of lease optionality in its retail portfolio. These initiatives, along with the continuing focus on disciplined expense, cash and inventory management, should position the Company to achieve a significant improvement in profitability for the quarter compared to the pre-tax loss reported in the third quarter of fiscal 2019.

 

On a Preliminary Basis, for the third quarter (13 weeks ending October 31, 2020 compared to the 13 weeks ended November 2, 2019), the Company currently expects:

 

Total revenues to be in the range of $72.0 million to $74.0 million compared to $70.4 million in the fiscal 2019 third quarter. Growth in net retail sales is expected to more than offset a decline in commercial and franchise revenue. The Company expects to achieve growth in net retail sales even with approximately 7% fewer operating days anticipated in the period driven by the COVID-19 pandemic;

 

E-commerce demand, online generated orders including “buy online ship from stores” and “buy online pick up in stores”, to increase more than 165% compared to the fiscal 2019 third quarter;

 

Gross profit margin to expand in the range of 450 to 550 basis points, reflecting the benefit of rent abatements and reductions driven by a high level of strategic lease flexibility and leverage of fixed costs, compared to 39.3% in the fiscal 2019 third quarter; and

 

Selling, general and administrative expenses to decline by $2.0 to $2.5 million, reflecting disciplined expense management inclusive of select temporary savings, compared to $35.4 million in the fiscal 2019 third quarter.

 

Based on these factors, the Company currently expects to deliver a meaningful improvement from the loss in Earnings Before Interest and Taxes (EBIT) of $7.7 million that it reported in the fiscal 2019 third quarter. On a preliminary basis, the Company expects EBIT in the fiscal 2020 third quarter to be in the range of break-even to a loss of $1.5 million.

 

 

 

In addition, the Company expects to maintain a solid balance sheet with quarter-end cash and cash equivalents of at least $20 million and to be current on substantially all of its rent payments. Inventory at the end of the quarter is expected to be 25% to 30% lower than at the end of the Company’s fiscal 2019 third quarter. The Company also expects to have no borrowings on its asset-based credit facility at quarter-end.

 

Sharon Price John, Build-A-Bear Workshop Chief Executive Officer commented, “As we noted at the end of the second quarter, we were seeing sales trends steadily improve in store locations compared to the prior year, which have now continued on a sustained basis, even with select temporary store closures and reduced operating hours, while e-commerce has stayed at record levels. Our initiatives to accelerate our digital transformation, a key pillar of our stated strategy, including enhanced omni-channel capabilities such as “buy online, ship from store” and “buy online, pick up in store” continue to allow us to capitalize on the increased demand for our products. We have been able to modify our popular in-store bear-building experience to reflect recommended safety protocols and even with lower in-store traffic levels, we are delivering retail sales growth driven by improvements in conversion and average transaction value. We continue to focus on financial liquidity and disciplined expense management while simultaneously executing our strategic plans designed to leverage the power of the Build-A-Bear brand and diversify revenue and profit streams for the long-term benefit of our stakeholders.”

 

The Company expects to report its final fiscal 2020 third quarter results in early December.

 

Note Regarding Non-GAAP Financial Measures

The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). The Company has supplemented the reporting of its financial information determined in accordance with GAAP with certain non-GAAP financial measures. These results are included as a complement to results provided in accordance with GAAP because the Company’s management believes these non-GAAP financial measures help identify underlying trends in its business and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should not be considered a substitute for or superior to GAAP results. These non-GAAP financial measures are defined and reconciled to the most comparable GAAP measure within this appendix.

 

About Build-A-Bear

Build-A-Bear is a multi-generational global brand focused on “adding a little more heart to life” appealing to a wide array of consumer groups who enjoy the personal expression in making their own “furry friends” to celebrate and commemorate life moments. The 500+ interactive brick-and-mortar retail locations provide guests of all ages an interactive entertaining experience, which often fosters a lasting and emotional brand connection. The company also offers an engaging e-commerce/digital purchasing activity called the “Bear-Builder” at www.buildabear.com. In addition, the company leverages its brand’s power and equity beyond retail through entertaining content, wholesale products and non-plush consumer product categories via licensing agreements with leading manufacturers. Build-A-Bear Workshop, Inc. (NYSE: BBW) posted total revenue of $338.5 million in fiscal 2019. For more information, visit the Investor Relations section of buildabear.com.

 

 

 

Forward-Looking Statements

This press release contains certain statements that are, or may be considered to be, “forward-looking statements” for the purpose of federal securities laws, including, but not limited to, statements that reflect our current views with respect to future events and financial performance. We generally identify these statements by words or phrases such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “future,” “potential” or “continue,” the negative or any derivative of these terms and other comparable terminology. All of the information concerning our future liquidity, future revenues, margins and other future financial performance and results, achievement of operating of financial plans or forecasts for future periods, sources and availability of credit and liquidity, future cash flows and cash needs, success and results of strategic initiatives and other future financial performance or financial position, as well as our assumptions underlying such information, constitute forward-looking information.

 

These statements are based only on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements, including those factors discussed under the caption entitled “Risks Related to Our Business” and “Forward-Looking Statements” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 16, 2020 and other periodic reports filed with the SEC which are incorporated herein.

 

All of our forward-looking statements are as of the date of this Press Release only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or other risks and uncertainties referred to in this Press Release or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the SEC could materially and adversely affect our continuing operations and our future financial results, cash flows, available credit, prospects and liquidity. Except as required by law, the Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

 

All other brand names, product names, or trademarks belong to their respective holders. 

 

Contacts:                    

Investors:                          

Voin Todorovic

Build-A-Bear Workshop

314.423.8000 x5221

 

Media:

Public Relations

PR@buildabear.com

 

 

 

* Non-GAAP Financial Measures

 

BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Results

(dollars in millions)

 

   

Projected

   

Actual

 
   

Q3

   

Q3

 
   

2020

   

2019

 

(Loss) income before income taxes (pre-tax)

 

($3.0)-($0.1)

    $ (7.7 )

(Loss) income before income taxes adjustments:

               

Interest expense (income), net

    -       -  

Earnings before interest and taxes (EBIT)

 

($3.0)-($0.1)

    $ (7.7 )

 

 
Image Exhibit

Exhibit 99.2

 

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v3.20.2
Document And Entity Information
Oct. 27, 2020
Document Information [Line Items]  
Entity, Registrant Name Build-A-Bear Workshop, Inc.
Document, Type 8-K
Document, Period End Date Oct. 27, 2020
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-32320
Entity, Tax Identification Number 43-1883836
Entity, Address, Address Line One 415 South 18th St.
Entity, Address, City or Town St. Louis
Entity, Address, State or Province MO
Entity, Address, Postal Zip Code 63103
City Area Code 314
Local Phone Number 423-8000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol BBW
Security Exchange Name NYSE
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001113809